PATRIOT TRANSPORTATION HOLDING, INC./NEWS
Contact: John D. Milton, Jr.
Chief Financial Officer 904/858-9100
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PATRIOT TRANSPORTATION HOLDING, INC. ANNOUNCES
RESULTS FOR THE THIRD QUARTER OF FISCAL 2017
Patriot Transportation Holding, Inc. (NASDAQ-PATI) Jacksonville, Florida;
July 26, 2017 -
Third Quarter Operating Results for Fiscal year 2017.
The Company reported net income of $456,000, or $.14 per share (inclusive of
$139,000, or $.04 per share, due to a reduced tax expense in accordance with
newly adopted accounting guidance on stock option exercises), compared to net
income of $1,379,000, or $.42 per share, in the same quarter last year.
Our revenue miles declined by 1,685,000, or 15%, to 9,524,000 versus the same
quarter last year. Total revenues for the quarter were $28,104,000, down
$3,258,000 from the same quarter last year. Transportation revenues (excluding
fuel surcharges) were $26,275,000, down $3,912,000. Our transportation revenue
per mile increased by 2.4% over the same quarter last year. Fuel surcharge
revenues were up $654,000 to $1,829,000 due to higher diesel prices and the
positive benefits of renegotiating fuel surcharge tables with several key
customers last year.
Our lower revenues in the quarter resulted from a net reduction of business
levels across our existing customer base mainly stemming from rates in
competitive bid processes and the move of a particular customer to a privately
owned fleet. Additionally, the lower driver count and difficulty hiring are
hindering us from adding back potential new business in certain markets where
business is available.
We managed to keep our overall variable costs in-line with the declines in
miles and revenues. Compensation and benefits decreased $760,000 due to fewer
miles driven but was negatively impacted by a one-time accrual of $264,000
resulting from the award of two additional vacation days for our drivers.
Net fuel expense (i.e. gross fuel expenses less fuel surcharges) decreased by
$1,063,000 due to fewer miles driven and higher fuel surcharges.
Insurance and losses were down by $169,000 versus the same quarter last year
due mainly to favorable adjustments to risk partially offset by higher health
claims. SG&A was flat as we remain staffed to grow our revenues and driver
count.
As a result, operating profit this quarter was down $1,756,000 to $534,000
(negatively impacted by the one-time $264,000 vacation accrual) compared to
$2,290,000 in the same quarter last year. Operating ratio was 98.1 this
quarter versus 92.7 in the same quarter last year.
First Nine Months Results for Fiscal year 2017.
The Company reported net income of $1,628,000, or $.49 per share (inclusive of
$389,000, or $.12 per share, due to a reduced tax expense in accordance with
newly adopted accounting guidance on stock option exercises), compared to net
income of $3,617,000, or $1.10 per share, in the same period last year. The
prior year included $1,029,000, or $0.31 per share, of net income from the
settlement of a claim with BP in connection with the 2010 Deepwater Horizon
event.
Our revenue miles declined by 3,640,000, or 11.3%, to 28,709,000 versus the
same period last year due to an overall net loss of business due to (i) rates,
(ii) privatization of a customer fleet and (iii) the lower demand for gasoline
in the earlier part of the fiscal year which was not fully offset by the
addition of new business with other customers. Total revenues were
$84,255,000, down $5,526,000 from last year. Transportation revenues
(excluding fuel surcharges) were down $7,483,000 to $79,227,000 as a result
of the lower revenue miles. However, our transportation revenue per mile
increased by 3.0% over the same period last year. Fuel surcharge revenues
were up $1,957,000 to $5,028,000 due to higher diesel prices and the positive
benefits of renegotiating fuel surcharge tables with several key customers
last year.
Our variable costs were in-line with the decrease in miles and revenues.
Compensation and benefits decreased $2,545,000 due to fewer miles driven. Net
fuel expense (i.e. gross fuel expenses less fuel surcharges) decreased by
$1,973,000 due to fewer miles driven and higher fuel surcharges.
Insurance and losses were up $196,000 versus the same period last year due
mainly to increased health claims. Depreciation increased $690,000 but was
mostly offset by lower repair and equipment leasing costs as we have continued
to replace leased equipment from a prior acquisition with new equipment. SG&A
was flat as we remain staffed to grow our revenues and driver count. Corporate
expense was $82,000 lower than last year mainly due to a $169,000 reduction in
legal fees.
As a result, operating profit was down $2,229,000 to $2,107,000 compared to
$4,336,000 last year. Operating ratio was 97.5 versus 95.2 last year.
Summary and Outlook.
The full impacts of the lost business from some large customer bids were
substantially realized this quarter and in the first nine months of this fiscal
year. Additionally, following a recent merger, another large customer took
significant steps to move some of its carrier requirements into the merged
entity's private fleet resulting in lost business for us in certain markets.
It typically takes some time to fully replace business losses of this nature.
We have added several significant pieces of business throughout the fiscal
year but not nearly enough to offset the losses. We are currently invloved in
three large bids with existing customers in markets where we already operate
and could take on new business should stores be awarded to us.
We have seen volumes picking up during the seasonally busier summer months
and a return to more normalized gasoline demand during the 3rd quarter. We
continued to see improvement in our per mile transportation revenue as well
as our net fuel expense following the implementation of more neutral fuel
surcharge tables last year.
The driver hiring market remains very tight. During the quarter we experienced
a reduction of our average driver force down to 613 versus 744 in the prior
year quarter, a 17.6% decline. We took several steps during this quarter to
drive future growth in our driver count. In June, we announced a driver pay
increase effective June 30, 2017 increasing base pay by 2.5% and awarding 2
additional vacation days. We have also begun targeting owner operators in our
marketing efforts and added 3 owner operators during the quarter. In the month
of June we saw a significant improvement in our driver turnover rate which
improved thirteen percentage points versus the average over the past four
months. Additionally, our average number of drivers in training increased by
39.4% this quarter versus the prior quarter and 24.3% versus the same quarter
last year. We are focused on maintaining these trends as we work to grow our
driver count and revenues.
We are currently very focused on improving our technology. Management believes
that investing in our technology gives us an opportunity to set ourselves apart
from our competition both with our employees and our customers. During this
calendar year we are planning to upgrade our entire network infrastructure to
provide more speed and reliability to the field and our customers. We are also
implementing several new software upgrades which we believe will enhance the
employee experience, improve customer satisfaction and ultimately allow us to
reduce expenses and improve our bottom line results.
During the quarter, we terminated the Pensacola, FL sales contract entered into
last quarter and immediately went under contract with a new buyer at the same
$1.5M sales price. The contract is subject to numerous contingencies. We made
significant progress on the sale of our Tampa terminal facility ($10M sales
price) and are in the process of granting an extension to allow the developer
the time it needs to get all plans and approvals finalized with the City of
Tampa.
We operate in many of the best markets in the country and are known in those
markets, and beyond, as a top rated carrier in both safety and customer
satisfaction. We are committed to continuing our focus on safety, driver
retention and customer satisfaction and are confident that execution of that
focus will enable us to improve our profitability. We will benefit from and
plan to maintain a strong balance sheet as we work to achieve our targeted
operating ratio in the low nineties and double digit returns on after tax
capital employed.
Conference Call.
The Company will host a conference call on Wednesday afternoon, July 26,
2017 at 2:00 PM (EDT). Analysts, shareholders and other interested parties
may access the teleconference live by calling 1-800-311-9404 domestic or
international at 1-334-323-7224 then enter pass code 6549. Computer audio
live streaming is available via the Internet through the Company's website
at www.patriottrans.com at the Investor Relations tab or by clicking the
following link http://stream.conferenceamerica.com/pth072617 or
http://stream.conferenceamerica.com/pth072617.m3u, whichever is most
compatible with your device or media player. An audio replay will be
available for sixty (60) days following the conference call. To listen to
the audio replay, dial toll free 1-877-919-4059 domestic or international
1-334-323-0140 then enter pass code 41229572. An audio archive can be
accessed via the internet at
http://archive.conferenceamerica.com/archivestream/pth072617.mp3.
Investors are cautioned that any statements in this press release which relate
to the future are, by their nature, subject to risks and uncertainties that
could cause actual results and events to differ materially from those
indicated in such forward-looking statements. These include general economic
conditions; competitive factors; political, economic, regulatory and climatic
conditions; driver availability and cost; the impact of future regulations
regarding the transportation industry; freight demand for petroleum product
and levels of construction activity in the Company's markets; fuel costs; risk
insurance markets; pricing; energy costs and technological changes. Additional
information regarding these and other risk factors and uncertainties may be
found in the Company's filings with the Securities and Exchange Commission.
Patriot Transportation Holding, Inc. is engaged in the transportation
business. The Company's transportation business is conducted through Florida
Rock & Tank Lines, Inc. which is a Southeastern transportation company engaged
in the hauling of liquid and dry bulk commodities.
PATRIOT TRANSPORTATION HOLDING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
2017 2016 2017 2016
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Revenues:
Transportation revenues $ 26,275 30,187 $ 79,227 86,710
Fuel surcharges 1,829 1,175 5,028 3,071
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Total revenues 28,104 31,362 84,255 89,781
Cost of operations:
Compensation and benefits 12,274 13,034 35,813 38,358
Fuel expenses 3,622 4,031 11,310 11,326
Repairs & tires 1,862 2,061 5,125 5,806
Other operating 1,134 1,195 3,144 3,464
Insurance and losses 2,567 2,736 8,168 7,972
Depreciation expense 2,349 2,245 7,208 6,518
Rents, tags & utilities 820 949 2,543 2,853
Sales, general &
administrative 2,446 2,404 7,038 7,016
Corporate expenses 591 502 2,206 2,288
Gain on equipment sales (95) (85) (407) (156)
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Total cost of operations 27,570 29,072 82,148 85,445
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Total operating profit 534 2,290 2,107 4,336
BP claim settlement - - - 1,687
Interest income and other 1 1 4 4
Interest expense (15) (31) (79) (98)
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Income before income taxes 520 2,260 2,032 5,929
Provision for income taxes 64 881 404 2,312
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Net income $ 456 1,379 $ 1,628 3,617
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Comprehensive income $ 456 1,379 $ 1,628 3,617
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Earnings per common share:
Net Income -
Basic $ 0.14 0.42 0.49 1.10
Diluted $ 0.14 0.42 0.49 1.10
Number of shares
(in thousands) used in computing:
-basic earnings
per common share 3,304 3,287 3,298 3,281
-diluted earnings
per common share 3,305 3,289 3,301 3,284